Why Programmatic Advertising is an Absolute Game Changer for Mobile Advertising

Many websites, including mobile websites, rely entirely on ad revenue to stay afloat. These publishers range from big players, like Google and Facebook, to many smaller single-developer passion-project websites. Prior to mobile, these sites had an easier time generating views and clicks of their advertisements. They had more screen real estate to play with and there were established best-practices for ad placement. Now mobile traffic has eclipsed desktop/laptop traffic and webmasters are struggling to keep their revenue streams flourishing. This article will outline how utilizing programmatic advertising can help mobile apps and mobile websites regain and expand their profitability.

The Struggles of Mobile Advertising

There are several things that make advertising on mobile significantly more difficult than on full-size websites. Here are a few things to consider:

Screen space – Mobile websites tend to be very vertical. They have one section on top of another for an entire page. Ads placed in this vertical stack often standout and visitors have grown numb to such ads and quickly scroll past them. Alternatively, some mobile sites and mobile apps have a floating ad at the top or bottom. Users have grown quite accustomed to ignoring this portion of the screen entirely.

Fewer ads – Related to screen space, but important enough to make it its own item, is the fact that smaller screens means fewer ads per page. Having more ads is not always the smart approach, but if you are forced to have fewer, you really need to optimize your click-through rates.

Newer platform – Web advertisers have had years to improve their approaches. Mobile is a newer platform and we are still learning how to best leverage it. Simply taking the web approach and applying it to mobile is a recipe for failure. New methodologies need to be crafted and perfected.

All of these issues are compounded by the fact that mobile traffic is now greater than desktop traffic (source). This is something that plagued Facebook in its early post-IPO period. They had nearly a billion mobile users but were simply not making any money from this traffic. Find almost any Q2-Q4 2012 articles on Facebook and you will see investors bearish outlooks due to their inability to drive mobile ad revenue.

Enter Programmatic Advertising

Traditional web advertising is very similar to TV advertising. When placing a “spot”, you consider how many viewers the show has and what their demographics are. You then buy an ad that runs during that show and it gets beamed out to all of its viewers. The problem here is that advertising works best when it is extremely targeted. This approach is limited in that it always has waste. If your product is purchased primarily by women, ages 50-65, any viewers not in that group are unlikely to be swayed by your advertisement. Ultimately some portions of your ad budget were wasted.

Traditional web and mobile advertising did the same thing. They would look at a website and see how much traffic it had and what a typical visitor looked like. If it was a decent match, they would buy an ad. Same approach, same amount of waste.

Programmatic advertising is an approach that attempts to eliminate this waste. Rather than tailoring an ad for a site or a show, it is tailored for an individual. Are you ever on Amazon or Facebook and see an ad for something you were just looking at? That’s programmatic advertising. Have you ever bought a product online and for the next few days only see add-ons for that product in ads? That’s programmatic advertising. Ever planned a trip and then see nothing but ads for attractions in that city? Programmatic advertising.

The other great thing about programmatic advertising is that it enables smaller companies, with limited ad budgets, to run ads while optimizing the profits of the ad-seller. Rather than buying placement for a fixed cost for a fixed period of time (think buying an ad in a newspaper), advertisers can establish a budget for ads on a particular platform. They specify how much they want to spend in a day and how much they are willing to spend per ad. They also provide information about the type of visitor they want their ads shown to. Then when a visitor hits a site, the programmatic advertising algorithm determines which ad is the best fit and which is willing to pay the most to be displayed to that visitor. It is basically an automated bidding system for the ad placement. This means each ad generates the greatest possible revenue for the ad-seller while giving additional flexibility and control to the advertiser.

How Does Programmatic Advertising Benefit Mobile Apps and Mobile Websites

As discussed above, one of the main challenges of mobile advertising is that there are fewer opportunities to display ads and that ads are more likely to be ignored. Programmatic advertising can help solve both of these problems. If the ads you are displaying are things users are interested in or are things that have been on their mind, they are significantly more likely to pause scrolling, consider, and potentially click the ad. If a visitor on your mobile site or app is trying to finalize their holiday shopping list, presenting them with a great gift idea (tailored to their interests) can be a great way to get some click-throughs.

Another major problem with traditional mobile advertising is that ad-sellers and advertisers know even less about a mobile app’s user base than they do about viewers of TV shows, readers of newspapers, or visitors of desktop sites. Apps tend to be single-purpose. Take a mobile game for example. If all you have to go on is that players of the game like a certain type of mobile game, you have a very narrow view of this individual. If you blanket this app with ads for similar games, you are undoubtedly leaving money on the table.

By tying your ads into a larger ad-network that compiles a more holistic view of this person, you can further customize each ad. Many apps and sites do this by leveraging Google, Facebook, or some other third-party that has the necessary information to optimize your ads. Even if these groups take a cut, it can significantly increase your mobile ad revenue.

Going back to the Facebook example for a moment, their mobile ad revenue went from non-existent in 2012 to nearly 3 billion dollars quarterly in 2015 (source). They of course have the advantage of a very complete view of each of their customers, but this shows the potential of programmatic advertising in the mobile space.

Conclusion

In many ways advertisements are the life-blood of the internet and while many ad-driven industries (newspapers, television, etc.) are struggling to adapt to an increasingly mobile world, some of the fastest growing companies are flourishing. This is due in large part to the revolutionary impact of programmatic advertising. By following the above examples, you can embrace programmatic advertising and begin optimizing your ads and ad revenue.

Paul is a Partner & Product Manager at The BHW Group. BHW creates mobile apps and specializes in React Native development. At BHW, Paul works directly with clients throughout the entire app development process. He frequently writes about mobile development, technology, and business-related topics.

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